Finance

After President Joe Biden was elected in late 2020, there was a spike in optimism among businesses, with 45% of respondents expecting better U.S.-China relations, the American Chamber of Commerce in China’s annual survey of members found.
That level of optimism has dropped to 27% of respondents in the latest survey — conducted in fall 2021 — the same as when Donald Trump was president and enacted tougher policies on China.
“What we’ve seen over the course of the last year is that there’s a new reality that has set in, where largely speaking many of the policies and sentiment of the Trump administration remain in place with the Biden administration,” Alan Beebe, president, AmCham China, said Tuesday in a call with reporters.

BEIJING — American businesses in China no longer expect relations between the two countries to improve from the tensions of the Trump administration, according to a business association survey.
After President Joe Biden was elected in late 2020, there was a spike in optimism among businesses, with 45% of respondents expecting better U.S.-China relations, the American Chamber of Commerce in China’s annual survey of members found.

That level of optimism has dropped to 27% of respondents in the latest survey — conducted in fall 2021 — the same as when Donald Trump was president and enacted tougher policies on China. Rising U.S.-China tension has ranked among the top five challenges for doing business in China since 2019, the survey said.
“There was a level of perhaps hope and optimism once Biden entered office that the relationship would improve,” Alan Beebe, president of AmCham China, said Tuesday in a call with reporters.
“But I think what we’ve seen over the course of the last year is that there’s a new reality that has set in, where largely speaking many of the policies and sentiment of the Trump administration remain in place with the Biden administration,” he said.
Since Biden took office in early 2021, Trump-era tariffs have remained in place, while the U.S. has added more Chinese companies to blacklists that prevent them from buying from American suppliers.

Trump used sanctions and tariffs in an attempt to pressure China to address longstanding complaints of intellectual property theft, unequal market access and forced transfer of critical technology.

While the Chinese central government has announced policies to address many of these concerns, AmCham said local implementation remains uneven.
The last year of regulatory crackdown and new laws on data privacy have added to American businesses’ challenges to operating in China and caution on future investments, the survey found.
Economists said last month that the worst of the crackdown was likely over as Beijing focuses more on growth, but they noted that does not mean the end or reversal of regulation.
China’s economic slowdown is also affecting business operations in the country, while Covid-19 travel restrictions discourage new, overseas talent from joining local teams.
The share of companies anticipating a year-on-year increase in profits ticked up to 59% in 2021 from 54% in 2020, but well below the 73% seen in 2017 before the pandemic and U.S.-China trade war, AmCham said.
Beebe said a reason for the continued pressure on profits is that companies have not been able to pass on rising production costs while remaining competitive locally.

Political pressure rises

U.S. businesses in China increasingly feel less welcome and face growing political pressure from Beijing, Washington and media in both countries, the survey found.
More than 40% of respondents said they received pressure to make or avoid making statements about politically sensitive issues, particularly among consumer businesses, the report said.
Geopolitical tensions have become business risks at a local level for many international companies.
Foreign brands like Nike and H&M faced backlash on Chinese social media last year over comments about reports of forced labor in Xinjiang in western China. More recently, U.S. and European businesses have cut ties with Russia after the Ukraine war began, while Chinese tech companies doing business in Russia have remained silent.
For American businesses in China, it’s too early to tell what the impact might be of U.S. sanctions on Russia, other than for businesses that export to Russia, Beebe said.

Investment plans hold steady

The share of respondents planning to increase business investment in China held steady from last year at around two-thirds, the survey found. The share of respondents not considering a relocation of manufacturing or sourcing also held steady at 83%, the same level since 2019.
AmCham survey respondents remained optimistic about the Chinese market opportunities, not just for the consumer market but also for resources and industrials.
Aerospace, oil and gas and energy were industries where well over two-thirds of respondents said the quality of China’s investment environment was improving.

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But a greater portion of businesses planned investments at a smaller scale this year, while 18% said U.S.-China tensions could delay or cancel China investment decisions. Significantly fewer companies were confident in Beijing’s commitment to open the local market further to foreign investment in the next three years.
Foreign companies overall increased their investment into China last year, up by 14.9% from a year earlier to 1.1 trillion yuan ($171.88 billion), according to China’s Ministry of Commerce.
Investors from Singapore and Germany increased their investment by 29.7% and 16.4%, respectively, the ministry said in January, without disclosing figures for other countries.
U.S. investment in China accounted for nearly 20% of foreign direct investment in the country in the years leading up to the pandemic, according to National Bureau of Statistics data accessed through Wind.

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NATIONALIST BLOGGERS in China have a new fascination: global payment systems. Vladimir Putin’s attack on Ukraine, followed by Western sanctions on Russia, have prompted internet pundits to extol the virtues of the Cross-Border Interbank Payment System (CIPS), the rails on which Chinese banks transfer and clear yuan-denominated payments around the world. Some have also taken to bashing SWIFT, the Belgium-based financial messaging system that has started excluding Russian banks from international payments. “That thing called SWIFT cannot be relied on,” avers one popular blogger on Weibo, a Twitter-like platform.CIPS and SWIFT are far from being household names in China. But the sweeping sanctions against Russia—on the usage of SWIFT by some of its banks and on its central bank—have put a spotlight on China’s homegrown financial networks, and the extent to which it can use them to help Russia. Three primary Chinese financial channels are in place to assist—two legitimate, one not. None are remotely adequate substitutes for the links to the Western financial system that Russia has lost.First, consider the direct connections between the two countries’ central banks, which do not require SWIFT messaging to transact. Russia has about $90bn-worth of mainly yuan-denominated deposits held with the Chinese central bank. It also has a 150bn-yuan swap-line agreement with China. It can use these funds to finance imports from China in the event that other trade-finance routes in dollars are blocked, note analysts at Natixis, an investment bank.But this trade will largely remain in yuan, limiting what Russia can purchase. China’s regulators are still keen to avoid American “secondary” sanctions. Primary sanctions target Russian institutions and American firms that deal with them. The secondary sort have yet to be used, but would target third parties outside America that transact with Russian firms, even if those transactions are permitted by local law. Allowing Russia to sell yuan-denominated assets in order to raise dollars could attract scrutiny and goes beyond what Chinese officials are willing to do for their friends in Moscow, reckons Rhodium, a consultancy.Next, there are the several complex financial networks China has spent decades building around the globe. Take, for example, the web of state-owned banks that have cropped up in commercial hubs around the world. China’s banking regulator may have stated on March 2nd that the country would not join Western sanctions, but most of its big banks will adhere to them, particularly those that interact most with the Western financial system and have legal entities that are domiciled in America. The four largest Chinese state-owned banks, for example, all have branches in Moscow. But according to the Federal Reserve, those same four firms also have offices in America which collectively had $106bn of assets at the end of September.These large institutions that conduct the bulk of trade finance between the two countries are highly unlikely to risk getting blocked from dollar clearing in order to continue doing dollar-denominated business with Russia. Two large state-owned banks stopped issuing dollar-denominated letters of credit for purchasing Russian commodities as soon as sanctions were issued, according to Bloomberg, a news service. Maintaining full access to global financial markets is “more valuable than anything Russia can offer”, according to Neil Shearing of Capital Economics, a consultancy.UnionPay, China’s state-owned bank-card firm, is another powerful financial network. It is set to gain market share in Russia in the wake of the departures of Visa and Mastercard, the American-based giants of global card payments, which were announced on March 5th. Several Russian banks have said that they will move to UnionPay, which already has a significant presence in the country.This shift will not come easily, however. Within Russia, UnionPay’s network is small and many banks do not have prior agreements with the company. Banks will need to show they meet network requirements to be licensed as a card issuer, says Zilvinas Bareisis of Celent, a research group. The cards must be designed, certified and then distributed—a process which can take months. For Russians abroad the problem is that, despite being in more than 180 countries, UnionPay is a fringe service in America and Europe, says Jason Ekberg of Oliver Wyman, another consultancy. UnionPay could also open itself to secondary sanctions by offering some types of services to sanctioned Russian banks.CIPS, meanwhile, will not be the miracle solution Chinese bloggers hoped for. That is because China has not been able to roll out its own messaging system. Foreign banks linked to CIPS still use SWIFT messaging to operate, notes Edwin Lai of Hong Kong University of Science and Technology. That means Western sanctions will still apply to any transfers between SWIFT-barred Russian banks and foreign banks.A final route for financial assistance will come through backchannel banks that dodge sanctions. China has a long history of turning a blind eye to smaller banks that finance trade with countries targeted by America and the UN. These activities usually occur on a small scale. And many are caught in the act and hit with secondary sanctions themselves. In 2012 Bank of Kunlun was hit with American sanctions for making $100m of payments with an Iranian bank. Five years later American regulators accused Bank of Dandong, another smallish lender, of dealings with North Korea. Some Chinese banks may take the risk with Russia, but these institutions will be minnows that are unable to provide the large-scale assistance Russia needs.All told, Sino-Russian financial links appear weaker than Russia might hope. The situation is likely to raise questions about the shortcomings in China’s efforts to build global financial networks. For CIPS, many of the problems are clear. In order to maintain control over capital flows, China has not linked the system directly with foreign banks outside mainland China, with the exception of Standard Chartered, a British bank with long-established links to China. CIPS’s indigenous messaging system works only with Chinese banks. To improve the system, China must continue opening it up and granting more direct links with foreign banks.The lack of such links makes the system more difficult and less attractive to foreign financial institutions. CIPS is for the most part illiquid, says Natixis. It processes just 13,000 transactions per day, equivalent to about 5% of those processed by America’s domestic-payments system, known as CHIPS.China’s President Xi Jinping has referred to Mr Putin as a “best friend”. The Russian conflict is laying bare some of China’s financial vulnerabilities. That may make the relationship less amicable. More

Traders on the floor of the NYSE, March 4, 2022.
Source: NYSE

Stock futures fell slightly in overnight trading Monday following the S&P 500’s worst day since October, as investors remained on edge about surging oil prices and slowing economic growth amid Russia’s invasion of Ukraine.
Futures on the Dow Jones Industrial Average dipped 100 points. S&P 500 futures traded 0.3% lower and Nasdaq 100 futures fell 0.4%.

The overnight action came after a steep sell-off on Wall Street where the S&P 500 dropped nearly 3% for its biggest one-day decline in more than a year. The blue-chip Dow tumbled almost 800 points for its fifth negative session in six, while the tech-heavy Nasdaq Composite slid 3.6%, falling into bear market territory, down 20% from its record high from November.
“Sentiment is palpably negative,” Adam Crisafulli, founder of Vital Knowledge, said in a note. “Any hope/optimism that may have exited seems to have completely evaporated from the market and there’s NO interest to buy dips.”
Oil prices spiked to start the week with U.S. crude hitting a 13-year high of $130. WTI futures eventually settled Monday’s session up 3.2% at $119.40, the highest settle since September 2008. The international benchmark, Brent crude, reached a high of $139.13 at one point overnight before settling at $123.21 per barrel, its highest since July 2008.
Investors continued to monitor developments of escalated geopolitical tensions. Ukraine said Moscow is seeking to manipulate its cease-fire arrangement by only allowing Ukrainian civilians to evacuate to Russia and Belarus.
Secretary of State Antony Blinken said Sunday that the U.S. and its allies are eyeing a ban on Russian oil and natural gas imports for its actions against Ukraine.

“There seems to be no evidence of improvements in Ukraine and the rhetoric out of DC continues to get more hawkish,” said Cliff Hodge, chief investment officer at Cornerstone Wealth. “While it’s impossible to know where the ultimate bottom may be, from a risk-reward standpoint, the market looks very reasonable.”
Dick’s Sporting Goods is set to report quarterly earnings Tuesday before the bell.

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Effects from any default on Russia’s sovereign debt as a result of the Ukraine crisis would spill over to emerging markets, economist Stephen Roach warns.  
And China would not be unscathed, he told CNBC’s “Squawk Box Asia.”
The U.S. has sanctioned Russia’s sovereign debt while major ratings agencies slashed Russia’s sovereign rating to “junk” status.

A man walks past Moscow’s stock market building in downtown Moscow on February 28, 2022.
Natalia Kolesnikova | Afp | Getty Images

Economist Stephen Roach warned effects from any default on Russia’s sovereign debt as a result of the Ukraine crisis would spill over to emerging markets, including China.
“If Russia does default on its debt … there will be broad spillover effects to sovereign debt in emerging markets around the world and China will not be unscathed from that,” he told CNBC’s “Squawk Box Asia.” “But I’m talking really of broader risks — guilt by association.”

Roach, a senior fellow at Yale University, added that “China cannot afford to stay in close alignment with Russia as it mounts this truly God-awful campaign against innocent Ukraine right now.”
“And the sooner China breaks with Russia, the better — and we’ll have to wait and see and watch that very closely,” he said.

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Shortly after Moscow launched its assault on Ukraine, the U.S. announced sanctions on Russia’s sovereign debt as well as its banks and central bank. Since then, major ratings agencies Fitch, Moody’s and S&P have slashed the country’s sovereign rating to “junk” status, saying Western sanctions could undermine Russia’s ability to service its debt.
China has said it won’t participate in those sanctions against Russia.
Meanwhile, major global index providers MSCI and FTSE Russell announced last week that Russian stocks will be pulled from all their indexes. MSCI also announced that it will be reclassifying its MSCI Russia indexes to “standalone markets” rather than emerging markets.

London-listed Russian stocks collapsed last week, before the London stock exchange suspended trading in 27 Russian securities. Still, nearly all their value was already wiped out by the time the suspension was announced Thursday.

High oil prices are ‘stagflationary’

Oil prices surged Monday morning in Asia after U.S. Secretary of State Antony Blinken said Washington and its allies are considering banning Russian oil and natural gas imports.
U.S. crude soared nearly 9% higher to above $130 per barrel at one point, while Brent had jumped as much as 9% to about $128 per barrel. Both hit highs not seen since 2008. U.S. crude was recently trading 7.49% higher at $124.35, while Brent spiked 8.85% to $128.56.

After the U.S. and Saudi Arabia, Russia is the world’s third-largest oil producer. It’s also the largest exporter of crude oil to global markets.
Roach told CNBC that higher oil prices are “definitely stagflationary.”
Stagflation is when the economy is simultaneously experiencing stagnant activity and accelerating inflation. The phenomenon was first recognized in the 1970s when an oil shock prompted an extended period of higher prices but sharply falling GDP growth.
“It certainly does put pressure on central banks around the world … and raises the prospects of significantly higher interest rates as a result, but it remains to be seen if this trend is going to continue for many years as the stagflation of the late 70s and early 80s did,” Roach said.

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A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 2, 2022. REUTERS/Brendan McDermid
Brendan McDermid | Reuters

U.S. equity futures fell Sunday evening as U.S. oil price jumped to their highest level since 2008 amid the ongoing war between Russia and Ukraine.
Dow futures lost 400 points, or 1.19%, while S&P 500 futures and Nasdaq 100 futures slid 1.5% and 1.91%, respectively.

West Texas Intermediate crude futures, the U.S. oil benchmark, traded as much as 10%, hitting $130 per barrel at one point before pulling back slightly. The international benchmark, Brent crude, traded 9% higher to $128.60, also the highest prices seen since 2008.
Secretary of State Antony Blinken said Sunday that the U.S. and its allies are considering banning Russian oil and natural gas imports in response to the country’s attack on Ukraine. Gas prices surged to their highest level since 2008, with the national average topping $4 a gallon, according to AAA.
Planned evacuations from the cities of Mariupol and Volnovakha Saturday were canceled after Russia violated a cease-fire agreement and fighting continued in or around both cities. Mariupol City Council said Sunday that Russia had again violated a second attempt at a temporary cease-fire that would enable its civilians to leave.
On Friday, the Dow fell 179 points, or 0.5%, to notch its fourth straight losing week. The S&P 500 lost 0.7% and closed more than 10% from its record close, a technical correction. The Nasdaq Composite moved down 1.6%.
The moves came as investors continued monitoring developments in the war between Russia and Ukraine, which weighed heavily on sentiment despite positive U.S. economic data out Friday.

“Investors aren’t really just jumping out and exiting, what they’re doing is rotating from Europe to the U.S., from cyclicals to big cap defensive type names,” Lindsay Bell, Ally’s chief markets and money strategist, told CNBC’s “Closing Bell.” “That’s a positive sign but what we’re going to need to see is that re-rotation back into the more growthy, riskier areas of the market to show that maybe the risk-on mode is back in play.”

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Energy stocks were a bright spot in the market as oil prices increased. Occidental Petroleum gained a whopping 17%. Meanwhile, bank stocks – which benefit from higher interest rates – were lower as the benchmark 10-year Treasury fell to around 1.73%.
European stocks were down sharply and finished the week 7% lower, marking their worst stretch since March 2020. The VanEck Russia ETF, one of the few Russia-linked funds still trading, fell 2% to finish the week down more than 60%.
Positive data from the U.S. Labor Department wasn’t enough for investors to shrug off concerns about the war between Russia and Ukraine. On Friday the Bureau of Labor Statistics reported the economy added 678,000 jobs in February. The monthly jobs gain topped economists’ expectations of 440,000, according to Dow Jones. The unemployment rate slipped to 3.8%.
For the week, the Dow and S&P 500 slid about 1.3%. The Nasdaq Composite lost roughly 2.8%.
“This is an example of people wanting to be defensive over the weekend, and not wanting to own risk as we’re seeing the situation unfold, so the bond market completely ignored the jobs report,” Jeff Sherman, DoubleLine Capital deputy chief investment officer, said on “Closing Bell” Friday. “The Treasury market right now is not focused on the backward-looking economic data, it’s looking at the current crisis that we’re facing, the Ukraine situation.”
Several economic data reports are scheduled to be released throughout the coming week, including the Consumer Price Index for February, due Tuesday. The key indicator is expected to show inflation continues to rise sharply, which could keep the stock market volatile in the week ahead.
The February job openings and labor turnover survey, or JOLTS, is expected Wednesday.
A quieter week of earnings is on deck. Some big tech names like Oracle, CrowdStrike and DocuSign are scheduled to report. Rivian Automotive, Ulta Beauty and Bumble will also report.

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“WE ARE NOW talking to our European partners and allies to look in a co-ordinated way at the prospect of banning the import of Russian oil.” With that bombshell announcement on March 6th, Antony Blinken, America’s secretary of state, set global oil markets ablaze. In the hours that followed, the price of West Texas Intermediate (WTI), the American benchmark crude, shot up by more than 9%. Brent crude soared to nearly $140 a barrel, double the price on December 1st, before dropping to $123 on March 7th. There is now speculation that oil could touch $200 a barrel if the war in Ukraine gets uglier.That is the volatile backdrop to the oil industry’s most important gathering of the year. Thousands of energy executives and other grandees, including the bosses of Saudi Aramco and Exxon, the secretary-general of the Organisation of the Petroleum Exporting Countries (OPEC) and America’s energy secretary, have come to Houston for CERAWeek, an annual conference put on by S&P Global, a financial-information firm. This week’s programme encompasses long-term issues like climate change and the energy transition but recent events ensure that geopolitics will dominate the gabfest.Oil markets are on a knife edge for three reasons. First, worries are growing that supply may be inadequate to cover disruptions. The balance between demand and supply was already tight last year. Fossil-fuel consumption rebounded strongly from the covid-induced slump in 2021. The International Energy Agency (IEA), an official forecaster, even expects global oil demand to return to pre-pandemic levels by year-end. With covid in retreat for now, Americans are getting their gas-guzzlers ready for the summer “driving season”.That, says Abhi Rajendran of Energy Intelligence, an industry publisher, means firms should be building inventories now but they are not. The snag is that oil supply has remained constrained as the result of under-investment and covid-related factors. The OPEC cartel has not been able to meet its own production quotas. Mr Rajendran reckons the market was undersupplied by some 1m barrels per day (bpd) before the war in Ukraine. That had pushed prices towards $100 a barrel.The second reason for prices surging in response to Mr Blinken’s statement is the fact that Russia, with its 4.5m bpd of crude exports and additional 2.5m bpd of oil-product exports, is the world’s second-biggest exporter of petroleum. If all those exports were cut off, as the result of an American-led energy embargo or through Vladimir Putin using export curbs as an economic weapon, the world economy would be dealt a severe blow.To soften it, the West has turned to buffer stocks. The IEA announced on March 1st that its member countries will co-ordinate the release of some 60m barrels of oil from their strategic reserves. The only times the IEA has previously done this were during the Iraq-Kuwait war in 1990, Hurricane Katrina in 2005 and the Libyan civil war in 2011. But Damien Courvalin of Goldman Sachs, a bank, argues that this one-off release of strategic stocks is “dwarfed by the potential magnitude of Russia’s export disruptions”. He reckons it would not offset the loss of Russian seaborne exports for long.Moreover, no other supplier, nor any combination of them, could produce sufficient incremental volumes of oil quickly enough to replace the loss of all Russian exports. James West of Evercore, an investment bank, reckons that even mighty Saudi Arabia can manage at most an extra 1m bpd of production within a few months. Total OPEC spare capacity is not much more than 2m bpd. Oil output is growing in Canada, Brazil and Guyana, but even taken together their growth will be far less than 1m bpd this year.That is why America’s energy diplomats are working overtime to find other sources of oil to make up for any Russian shortfall. One territory they are exploring is their own shale country. Top federal officials from several different cabinet ministries have landed at CERAWeek, hoping to woo American oilmen into cranking out more black gold. The petroleum lobby is not happy with the Biden administration, which it sees as climate-obsessed and vindictive towards fossil fuels, so these overtures are likely to prove awkward. What is more, American shale output is already set to expand by 1m bpd this year. Serious supply-chain stresses (one oilman complains that the price of sand, a vital component in the shale process, has tripled of late) stand in the way of doubling that—which could not happen in less than a year, in any case.One development that would be helpful is a lifting of sanctions on Iran. That could potentially increase exports by around half a million bpd within six months and double that within a year. Last week it appeared as though a sanctions-easing deal between Iran, America and other world powers was close. However, it was dealt a setback by sudden demands by Russia for guarantees from America that any sanctions over Ukraine would not affect Russian trade with Iran. American negotiators are also reportedly negotiating now with Venezuela, another country with oil exports restricted by sanctions, but Mr Courvalin reckons this could produce only about half a million bpd in extra exports within a year.The emergence of “self-sanctions” is the third reason energy traders are worried. Strikingly, Russian petroleum exports have become toxic even before America has imposed any overt ban on them. The sanctions imposed thus far on Russia have explicitly avoided targeting its energy sector, but Fatih Birol, head of the IEA, notes that this has not prevented them from curtailing its petroleum exports. “There is confusion in many parts of the world about whether buying Russian oil is affected by sanctions or not,” he says. As a result, many counterparties are steering clear of anything Russian.That has sent Russian oil exports into a dive. David Fyfe of Argus, an energy publisher, reckons that some 2m bpd of Russian petroleum is “already off the market one way or another”. Western oil majors have come under intense pressure to limit their use of Russian crude and refined products. Even firms in China and India, normally relaxed about circumventing American sanctions, are avoiding doing business with Russian-owned, operated or flagged vessels or Russian ports. When news surfaced that Shell stood to make a $20m profit trading a discounted cargo of Russian crude after piously withdrawing from several joint ventures in the country, the firm suffered a backlash, prompting it to announce it would place any profits from Russian oil into a Ukraine aid fund.A slippery predicamentThe prospect of a Russian oil embargo poses a dilemma for America. On one hand, Western leaders want to punish Russia for its aggression without putting troops on the ground in Ukraine, and energy is the most powerful of the tools they have not yet used; Russia’s biggest remaining vulnerability is its massive energy exports. On the other hand, precisely because its exports are so big, cutting them off all at once would risk destabilising the world economy. The IMF warned on March 5th that the consequences of the war and the economic sanctions are already “very serious”, and if things escalate could become “more devastating”.That is why Mr Blinken went on in his statement on March 6th to say that America would only impose a ban on Russian exports (with allies or, if necessary, on its own) if it can ensure that “there’s still an appropriate supply of oil on world markets.” Allies’ reluctance to join in may be understandable, given that America imports little Russian oil whereas Europe is Russia’s biggest customer: it imports 2.7m bpd of crude and 1m bpd of oil feedstocks and products from Russia, according to Richard Joswick of S&P Global Commodity Insights.Is Mr Blinken serious? A “shock and awe” ban risks pushing America and Europe into recession. That may tempt them into another, less dramatic option. They could finesse things with graduated sanctions, as America did with Iran. Imposing energy sanctions that ratchet down Russia’s permitted exports every few months would give it an incentive to curb its bad behaviour. But the creative ambiguity and clumsiness involved in any attempt to finesse an embargo might lead to an oil shock all the same. More

Gas prices surged to the highest level since 2008 on Sunday.
The national average for a gallon of gas hit $4.009, according to AAA, which is the highest since 2008.
Andy Lipow, president of Lipow Oil Associates, said the next stop for the national average is $4.50 a gallon.

Fuel prices are displayed at gas stations on March 03, 2022 in Chicago, Illinois. Increasing demand and dwindling supplies coupled with global supply uncertainty driven by the war in Ukraine have driven gas prices over $4-per-gallon in many parts of the country.
Scott Olson | Getty Images

Gasoline prices surged to the highest level since 2008 on Sunday, as crude oil supply fears stemming from Russia’s war on Ukraine increase the impact on consumers at the pump.
The national average for a gallon of gas hit $4.009 on Sunday, according to AAA, which is the highest since July 2008, not adjusted for inflation. Prices have been rising at a fast clip. Consumers are paying 40 cents more than a week ago, and 57 cents more than a month ago.

In some places, consumers are paying much more. California’s average is now $5.288 per gallon.
The jump in prices follows a surge in the price of oil amid Russia’s war on Ukraine. The underlying cost of oil accounts for more than 50% of the cost of gas that consumers put in their cars, and U.S. oil is trading at levels not seen since 2008.
Russia is a key producer and exporter of oil and gas. While Western allies’ sanctions have so far carved out room for Russia’s energy trade to continue, the market is self-sanctioning — in other words buyers are avoiding Russian products. According to estimates from JPMorgan, 66% of Russian oil is struggling to find buyers. This is creating supply fears in what was an already tight market prior to Russia’s invasion.
Andy Lipow, president of Lipow Oil Associates, said the next stop for the national average is $4.50 a gallon as supply disruptions ripple across the energy complex.
“Oil buyers are reducing their purchases of refined products from Russia causing Russian refineries to shut down,” he said. “Dockworkers are refusing to unload vessels carrying oil and gas. Insurance rates are skyrocketing causing vessel owners to cancel ship bookings loading in Russia and this is also impacting on the ability of Kazakhstan to sell their oil.”
The jump in gas price is contributing to inflationary fears across the economy. The Biden administration has said for months that they are working to bring down prices at the pump, and in the fall tapped the Strategic Petroleum Reserve. With prices up sharply since, some are calling on the administration to pause the federal gas tax.

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In a letter addressed to the Ukrainian government, PayPal CEO Dan Schulman said the company was suspending services in Russia.
It’s the latest payment organization to sever ties with Russia as the country faces Western sanctions over its invasion of Ukraine.

The PayPal app shown on an iPhone.
Katja Knupper | DeFodi Images | Getty Images

PayPal said Saturday it was suspending its services in Russia, adding to the number of firms retreating from the country in response to its invasion of Ukraine.
“Under the current circumstances, we are suspending PayPal services in Russia,” Dan Schulman, PayPal’s CEO, said in a letter addressed to the Ukrainian government.

The letter was posted on Twitter by Ukraine’s minister of digital transformation, Mykhailo Fedorov, who has pressured businesses including Apple to Microsoft to cut ties with Russia.
“So now it’s official: PayPal shuts down its services in Russia citing Ukraine aggression,” Fedorov tweeted Saturday. “Thank you @PayPal for your supporting!”
A PayPal spokesperson confirmed the company was shutting down in Russia. The company will “continue work to process customer withdraws for period of time, ensuring that account balances are dispersed in line with applicable laws and regulations,” the spokesperson told CNBC.
The payment processor had already discontinued domestic services in Russia in 2020. This latest action relates to its remaining business in the country, including send and receive functions and the ability to make international transfers via PayPal’s Xoom remittances platform.
Russians were prevented from opening new PayPal accounts earlier this week, the company said.

PayPal is the latest payment organization to sever ties with Russia, which now faces a barrage of sanctions from the West over President Vladimir Putin’s decision to invade Ukraine.
Sanctions saw SWIFT, the global interbank messaging network, bar several Russian banks, while Visa and Mastercard this week said they would also block Russian financial institutions from their networks.
“It’s now basically impossible to send money to any individual in Russia,” said Charles Delingpole, CEO of ComplyAdvantage, a fintech start-up that helps firms with regulatory compliance.

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